EVS 2016 John Hockey and Jeremy Moody 1

Framework and Content Determined by: recognition; extensive consultation; feedback. 2

Resolved to: remain clearly focused on real estate; provide additional guidance and technical information; meet the diverse needs of the 63 TEGoVA TMA’s; concentrate on high level principles. 3

Meeting the objectives: follows the direction of previous editions; informed by existing and emerging European regulation; yet upholding the scientific and professional obligation on the valuer. 4

EVS 2016 provides: 5 harmonised European standards, guidance and technical information; designed for use by all sectors of the European valuation profession; corporate governance and ethical considerations embedded within the standards.

Divided into four parts: 6

European Valuation Standards 7 EVS 1 Market Value EVS 2 Valuation Bases Other than Market Value EVS 3 The Qualified Valuer EVS 4 The Valuation Process EVS 5 Reporting the Valuation  all have been refined and reinforced

EVS 1 8 EVS 1 Market Value - expanded to include a definition of Market Rent “The estimated amount of rent at which the property should be leased on the date of valuation between a willing lessor and a willing lessee on the terms of the actual or assumed tenancy agreement in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without being under compulsion.”

EVS 2 EVS 2 Valuation Bases other than Market Value – Fair Value, Special Value, Investment Value, Mortgage Lending Value (MLV), Insurable Value Fair Value: distinguishes general definition for valuation from specific accounting definition MLV: extends the commentary, informed by Regulation (EU) No 575/2013 (CRR) “the value of immoveable property as determined by a prudent assessment of the future marketability of the property taking into account long term sustainable aspects of the property, the normal and local market conditions, the current use and alternative appropriate uses of the property.” 9

EVS 3 10 EVS 3 The Qualified Valuer, expands the requirements - not only competent to act, but also independent and without any undisclosed potential conflicts of interest: “Any connection, other potential conflict of interest or other threat to the valuer’s independence and objectivity, should be disclosed in writing to the client and recorded in the valuation report”.

EVS 4 EVS 4 The Valuation Process -incorporates and amends guidance published in 2013 relating to terms of engagement. “Data retained following the submission of a valuation must be sufficient to enable verification that the analysis and evaluation undertaken in the approach, or approaches, to providing the opinion of value reported were sufficient for the type and scale of valuation” 11

EVS 5 12 EVS 5 Reporting the Valuation -provides commentary on situations where opinions of “value in the longer term” are requested - “while such an approach may be useful ….. It will not be a measure of Market Value”

European Valuation Guidance Notes EVGN 4 Assessment of Insurable Value and Damages EVGN 3 Property Valuation for Securitisation Purposes EVGN 2 Valuations for Lending Purposes EVGN 1 Valuation for the Purpose of Financial Reporting 13

European Valuation Guidance Notes EVGN 7 Property Valuation in the Context of the Alternative Fund Managers Directive EVGN 6 Cross-border Valuation EVGN 5 Assessment of Investment Value 14

European Valuation Guidance Notes EVGN 10 Valuations: Compliance with EVS EVGN 9 EMF / TEGoVA Commercial Loan Specification EVGN 8 Property Valuation and Energy Efficiency 15

Part 2 16 EC 1 European Valuers’ Code of Ethics and Conduct EC 2 European Code of Measurement European Codes:

Part 3: European Union Legislation and Property Valuation General Introduction 2. The EU Internal Market 3. Health and Safety 4. Energy5. Environment 6. The Common Agricultural Policy

Part 4: Technical Documents EVIP 1 Sustainability and Valuation EVIP 2 Valuation Certainty and Market Risk EVIP 3 Apportionment of Value between Land and Buildings EVIP 4 Valuation and Other Issues for Recurrent Property Tax Purposes 18

EVIP 5 Valuation Methodology EVIP 6 Automated Valuation Models (AVM) EVIP 7 European Property and Market Rating: A Valuer’s Guide EVIP 8 Fair Value Measurement under IFRS 13 19

…. also in Part 4 Summary of TEGoVA’s Minimum Educational Requirements Summary of Recognition of Qualifications: TEGoVA’s REV and TRV Programmes Glossary 20

New Guidance Notes: EMF + TEGoVA Commercial Loan Specification Valuations: Compliance with EVS 21

New Technical Documents Valuation Certainty and Market Risk Automated Valuation Models (AVM) 22

Status ECB Recognition (May 2014) “Real estate should be valued in line with European Valuation Standards 2012 (Blue Book) and anther international standards … - where a conflict is seen EVS 2012 will apply for the avoidance of doubt …” (Asset Quality Review) Mortgage Credit Directive (2014/17) “In order to be considered reliable, valuation standards should take into account internationally recognised valuation standards, in particular those developed by … the European Group of Valuers Associations...” (Recital 26) der to be considered reliable, valuation standards should take into account inter 23

Where and when … EVS 2016 is effective from 1 June 2016 available to download from the TEGoVA website  Thank you for your attention. 24